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Meanwhile, there was scant reaction in the market to UK inflation figures, with the CPI rate unchanged for the third month in a row at 2.7 per cent in December.

Chip designer Arm Holdings was among the fallers after broker Morgan Stanley cooled expectations for further strong growth in the share price. It has risen by 9 per cent this year, including today's fall of 36p to 837p.

11.15:

The FTSE 100 is trading just 2 points higher at 6,109.8 as the City digests a series of retailer updates.

The share price rally of 70p to 1395p means the stock is now back at levels seen before a slump in September caused by fears over demand from big-spending customers in China.

In the FTSE 250, shares in grocery delivery chain Ocado were 6 per cent or 5.1p higher at 89.1p. It impressed analysts with a 14 per cent rise in sales for the six weeks to January 6.

There was also a decent performance from car parts and bicycles retailer Halfords, which upgraded its profits guidance on the back of a 0.4 per cent rise in like-for-like sales for the 15 weeks to January 11. Shares were up 4.8p to 333.3p.

HMV's shares were suspended with a value of just £5million as it collapsed into administration. Read more here.

Anticipation is now ramping up ahead of fourth quarter earnings reports from a number of big Wall Street players, including JP Morgan and Goldman Sachs later this week.

Investors are also taking stock of a wary economic forecast and warning over the Washington 'debt ceiling' stand-off by US Fed chairman Ben Bernanke last night.

US politicians are wrangling over whether to raise the country's borrowing limit, although failure to do so would mean a government shutdown and potentially catastrophic default by the world's biggest economy.

Fawad Razaqzada, market strategist at GFT Markets, said: 'Fed chief Bernanke has served up something of a reality check regarding the health of the US economy.

'Last week's suggestions that a more hawkish approach to monetary policy was imminent are being played down and although the matter clearly remains under review, low interest rates do seem likely to prevail for some time yet.'

Germany's GDP growth estimate for 2012 has come in at 0.7 per cent, or 0.9 per cent after an adjustment for three fewer working days than the year before. This is much lower than the 3 per cent economic expansion in 2011 and 4.2 per cent achieved in 2010.

Timo Klein, economist at IHS Global Insight, said: 'The significant slowdown last year compared to 2010-11 has two main reasons.

'The upswing of 2010-11 had a major catch-up component following the plunge of -5.1 per cent in 2009 after the Lehman Brothers crash in late 2008, and the eurozone debt crisis, although failing to push Germany into recession as has happened in many other eurozone countries, has nonetheless had a major dampening impact on investment and also restrained exports.'

8.30: The FTSE 100 has opened down 6.3 points at 6,101.5 after Fed boss Ben Bernanke failed to soothe fears about the outlook for the US economy and the country's fraught debt ceiling negotiations.

Bernanke offered a cautiously optimistic forecast but fell short of giving clear hints about when the central bank would start to curb its aggressive stimulus programme, despite speculation that it will be halted this year.

Worries about the US debt ceiling talks are also keeping investors on edge, with Bernanke urging bitterly divided politicians to lift the country's borrowing limit to avoid a potentially disastrous debt default.

The US scraped up against its current
$16.4trillion debt ceiling on December 31 and is now employing special
measures to meet its financial obligations. The Treasury Department said
those steps could be exhausted by mid-February.

'The
dawning realisation that we are in for a re-run of the recent "down to
the wire" fiscal cliff showdown is once again set to keep traders in a
bipolar mental state regarding the US, and thus global, economy,' said
London Capital Group dealer Jonathan Sudaria.

The
FTSE 100 closed down 13.72 points at 6,107.86 yesterday, as the index
failed to hold recent highs after gaining more than 2 per cent since the
start of 2013.

British
house prices held steady last month and were tipped to pick up in coming
months in the strongest survey by the Royal Institution of Chartered
Surveyors since mid-2010.

Inflation
numbers for December will be released later, with CPI seen up 0.5 per
cent on the month to give an annualised rate of 2.7 per cent, unchanged
from November.

Germany's GDP numbers for 2012 are due out later this morning, and investors will be analysing the extent of the damage to the powerhouse economy from the recession in most of Europe.

Stocks to watch today include:

RIO TINTO: The global miner aims to boost iron ore output by 15 per cent this year after production in 2012 climbed to 253million tonnes, beating its own guidance, as resurgent Chinese demand drives a price recovery.

BURBERRY GROUP: The luxury brand posted a 9 per cent rise in third-quarter underlying revenue as its wealthiest shoppers continued to spend even though some of its more aspirational consumers were impacted by faltering economies.

HALFORDS: The bicycles-to-car-parts group edged up its profit expectations for the full-year after enjoying healthy sales in car maintenance and top bike ranges in the Christmas quarter.

OCADO GROUP: The online grocer said gross sales for the six trading weeks to January 6 rose 14.2 per cent year-on-year to £91.6million in what it described as a 'very good festive season'.

IG GROUP: The financial spread-betting firm blamed low volatility linked to 'global economic uncertainty' for a 14 per cent drop in its half year revenue to £169million. Profits for the six months to the end of November fell 21 per cent to £81.1million.

MICHAEL PAGE INTERNATIONAL: The recruitment firm sees a 1.5 per cent fall in full year 2012 gross profit to £526.8million, with full year operating profit expected to be in the region of £65million, and it anticipates Q1 2013 to be another challenging quarter.

CAPITAL SHOPPING CENTRES: The shopping mall developer is changing its name to intu properties on Feb 18 as it seeks to create a single brand for the company.

PROVIDENT FINANCIAL: The sub-prime lender said it expects to report 2012 results in line with market expectations, with continued outperformance at Vanquis Bank compensating for relatively subdued demand for credit.

ASHMORE GROUP: The emerging markets fund manager said clients added $1billion of new money to its range of funds in the last three months of 2012, as investors looked to benefit from a rally in assets across India and China.

INTERMEDIATE CAPITAL GROUP: The group said its asset under management have risen by 7 per cent to €12.9billion since the end of September.

LAVENDON GROUP: The group said its full-year results are expected to be at the upper end of the board's expectations.

MEARS GROUP: The firm said it anticipates reporting results for the full year to December 31 2012 in line with management expectations, with continued strong trading and increased order book, although its non-core Mechanical & Electrical business experienced difficult trading conditions and is expected to show an operating loss for the full-year.

SPIRIT PUB COMPANY: The pubs operator said it is on track to deliver full year expectations, with Christmas trading strong, showing a 5.0 per cent rise in like-for-like sales.

SMITHS NEWS: The firm said it remains on track to deliver strong growth in underlying profit before tax for the year to 31 August 2013, with total group revenues increased by 2.0 per cent year-on-year.

ALLIANCE PHARMA: The drugs firm said it sees its 2012 pre-tax profits slightly ahead of forecasts, with its gross margin rate as expected, while turnover slipped to £44.9million, down from £46million in 2011.

AVANTI COMMUNICATIONS: The London-based satellite firm expects Africa to provide the bulk of its revenue within five years as pent-up consumer demand for broadband and phone operators' hunger for network capacity drive sales on the continent.

ENRC: The Kazakh-based miner rose on Monday partly due to speculation it had turned down a bid approach from major shareholder Alijan Ibragimov, according to the Daily Mail market report.